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US trade deficit rises to $62.2 bln in July PDF Print E-mail
Friday, 12 September 2008

AFP, WASHINGTON  - The US trade deficit rose by a worse-than-expected six percent in July to 62.2 billion dollars on high oil prices and surging Chinese imports, the Commerce Department said Thursday.

The July gap was wider than the consensus forecast for an increase to 58.0 billion dollars. It was the largest gap since March 2007 and followed two consecutive months of shrinking deficits as a weak dollar boosted exports.
 
The department revised sharply upward the June deficit to 58.8 billion dollars from an initial estimate of 56.8 billion.
 
July exports rose 5.4 billion dollars to a total 168.1 billion dollars and imports were up 8.7 billion dollars to 230.3 billion, the department said.
 
On a 12-month basis, the July trade deficit was 4.9 billion dollars higher than a year ago.
 
Oil imports accounted for more than half of the trade gap. Petroleum imports rose to 43.4 billion dollars from a revised 37.3 billion, the sharpest increase in the year to date, as crude oil prices skyrocketed.
 
The average price of imported oil shot up to 124.66 dollars a barrel, from 117.13 dollars in June.
 
The trade gap with the Organization of the Petroleum Exporting Countries (OPEC) surged 34 percent to 24.2 billion dollars
 
Oil prices hit record highs above 147 dollars a barrel on July 11, but have since fallen about 30 percent as investors fret about softening demand in the slowing global economy.
 
The politically sensitive issue of ballooning Chinese imports was in focus. Chinese imports swelled to 24.9 billion dollars in July from 21.4 billion in June.
 
The trade data comes ahead of high-level US-China trade talks next week in California. Critics say China maintains its yuan currency undervalued to bolster exports, and US lawmakers blame outsourcing to China for the loss of thousands of jobs.
 
"Don't be confused about the worse than expected trade data as being caused by a strengthening US dollar," said Jennifer Lee, analyst at BMO Capital Markets.
 
"This is about weakening foreign economies. The problem for US economic growth is that this will detract from Q3 growth. However, this data is for July and doesn't reflect massive drop in crude oil prices that occurred in August through to today."
 
The US trade deficit with the European Union leapt to 11.0 billion dollars in July from 8.2 billion the prior month.
 
The gap with Canada rose 15 percent to 8.3 billion dollars and the deficit with Japan edged 3.3 percent higher to 6.3 billion dollars.

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